Correlation Between Abingdon Health and Legal General
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Legal General at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Abingdon Health and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abingdon Health Plc and Legal General Group, you can compare the effects of market volatilities on Abingdon Health and Legal General and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Abingdon Health with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Legal General.
Diversification Opportunities for Abingdon Health and Legal General
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Abingdon and Legal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group and Abingdon Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Abingdon Health Plc are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Abingdon Health i.e., Abingdon Health and Legal General go up and down completely randomly.
Pair Corralation between Abingdon Health and Legal General
Assuming the 90 days trading horizon Abingdon Health Plc is expected to under-perform the Legal General. In addition to that, Abingdon Health is 2.99 times more volatile than Legal General Group. It trades about -0.01 of its total potential returns per unit of risk. Legal General Group is currently generating about 0.03 per unit of volatility. If you would invest 21,268 in Legal General Group on September 14, 2024 and sell it today you would earn a total of 1,952 from holding Legal General Group or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abingdon Health Plc vs. Legal General Group
Performance |
| Timeline |
| Abingdon Health Plc |
| Legal General Group |
Abingdon Health and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Legal General
The main advantage of trading using opposite Abingdon Health and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Legal General can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Legal General will offset losses from the drop in Legal General's long position.| Abingdon Health vs. Gear4music Plc | Abingdon Health vs. BW Offshore | Abingdon Health vs. Gruppo MutuiOnline SpA | Abingdon Health vs. Medical Properties Trust |
| Legal General vs. Inspiration Healthcare Group | Legal General vs. Target Healthcare REIT | Legal General vs. Cardinal Health | Legal General vs. Abingdon Health Plc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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